In an effort to prevent a future tax hike on Virginia businesses, Gov. Ralph Northam proposed allocating $862 million in federal relief money to the Unemployment Insurance Trust Fund, but a small business association is warning it might not be enough.
The Unemployment Trust Fund, which provides unemployed Virginians with benefits, is funded primarily through payroll taxes from employers. During the COVID-19 pandemic, Virginia’s fund dried up and the state was forced to borrow money from the federal government. Unless the losses can be fully offset, business taxes would automatically increase to maintain the fund because of the state’s funding formula.
A May survey from the NFIB found that nationally, seasonally-adjusted 48 percent of small businesses reported unfilled job openings for the fourth consecutive month.
“Virginia small businesses are having a historically hard time hiring workers and getting back to pre-COVID levels,” NFIB Virginia State Director Nicole Riley said in a press release.
Fully-vaccinated Virginians no longer need to wear masks in most places, including indoors. On Friday, Governor Ralph Northam updated his mask mandate, effective Saturday, to align with new Centers for Disease Control and Prevention (CDC) guidance released Thursday.
“Virginians have been working hard, and we are seeing the results in our strong vaccine numbers and dramatically lowered case counts,” Northam said in his announcement.
Virginia’s minimum wage is going up to $9.25 an hour on May 1. The change is the result of 2020 legislation, part of several pro-worker changes initiated by the Democrat-controlled General Assembly in 2020 and 2021. Advocates say the change will boost the economy by enabling more people to pay rent and spend money in Virginia businesses. But opponents say the increase violates free-market principles and will harm employers who have to increase their hourly compensation while dealing with a COVID-19 economy.
As the country emerges from COVID-19 restrictions, small businesses are doing better, according to a March report from the National Federation of Independent Business (NFIB). However, uncertainty about the next few months for business owners is still high, and businesses are having trouble finding qualified workers to fill positions.
“Virginia’s small businesses are working hard on their recovery but are struggling to find the right workers to fill open positions,” NFIB Virginia State Director Nicole Riley said in a Wednesday press release
Virginia Governor Ralph Northam’s administration has recommended to the General Assembly that the state not conform its tax code to specific provisions included in the recently-signed federal emergency relief bill that gives businesses who received Paycheck Protection Program (PPP) loans a significant tax benefit.
Under the provisions of the Consolidated Appropriations Act (CAA), signed into law by President Donald Trump in late December, businesses in the Commonwealth that got forgivable PPP loans would not be taxed on that income and could deduct their business expenses covered by the federal payment.